Conclusions and recommendations
1. The
ECGD has made progress on supporting sustainable development that
deserves to be recognised. The objectives introduced by the 1999
Mission and Status Review placed considerable demands on a small,
specialised department, with a difficult role to play in balancing
business and financial needs with wider government concerns. The
mechanisms put in place following the review are a sound basis
for further action on sustainable development. (Paragraph 5)
2. While the ECGD
must balance the duty to raise its standards of sustainable development
against its duty to support the competitiveness of UK industry,
it has a unique capacity to influence and raise standards internationally.
(Paragraph 7)
3. We conclude that
a change to the ECGD's primary remit is not currently necessary,
but continued scrutiny of further progress is important. The current
remit provides an adequate basis for sustainable development to
underpin its activities. The challenge for the ECGD is to demonstrate
that sustainable development is given appropriate weight within
its current remit, and that it does nothing that would actively
undermine this principle. (Paragraph 10)
4. The ECGD has a
responsibility to support UK exporters. Any move by the Government
to adopt policies that limited support to sectors such as defence,
aerospace and fossil fuels, or to assess these sectors by different
standards, would need to be carefully assessed. While these sectors
remain within the ECGD's portfolio, the agency must take steps
to improve the scrutiny of sustainable development in these areas.
(Paragraph 14)
5. A large programme
of support for sustainable and environmental industries would
help the ECGD to revitalise its role while remaining within its
current remit. Although it cannot compete directly with the private
sector, the ECGD should establish a programme actively to promote
its services to environmental industries and to other projects
that could support sustainable development. (Paragraph 17)
6. No offer of support
should be made, whether actual or provisional, until the ECGD's
Business Principles Unit has completed its assessment, and its
recommendations have been duly considered. The Government must
be prepared to provide the ECGD with whatever further resources
are necessary for the Business Principles Unit to carry out its
sustainable development assessment work swiftly, effectively,
and consistently. (Paragraph 20)
7. The ECGD should
disclose the precise standard used as the basis for environmental
and sustainable development review in every high-impact case.
This information should be published prominently alongside the
project assessment information (Paragraph 21)
8. We recommend that
the ECGD commissions an independent study into how its environmental
and sustainable development standards could be tightened, including
an assessment of how UK Sustainable Development objectives could
be effectively reflected in the ECGD's assessment standards. Such
a study should be used to help the ECGD raise international standards.
The ECGD should devise and publish a strategy, so that it can
be properly scrutinised, and so that UK exporters and other Export
Credit Agencies are aware of the ECGD's intentions. Where a standard
can be raised without undue impact on the competitiveness of UK
industry, the higher standard should be adopted and concomitant
action from other Export Credit Agencies should be encouraged.
(Paragraph 23)
9. Constructive engagement
and the ability to exercise discretion are important and, when
used appropriately, can help to improve project standards in general.
But the failure effectively to communicate these decisions and
the reasoning behind them leaves the ECGD open to criticism and
suspicion. The disclosure of the reasoning behind these decisions,
and the effects of the constructive engagement process, must be
improved if the system is to inspire confidence. (Paragraph 26)
10. We welcome the
recent decision of the ECGD to report the carbon dioxide impacts
of high and medium impact projects. The information gathered under
this exercise must be put to practical use by helping further
to improve the standards of individual projects. This is an area
where the ECGD should be leading from the front and setting an
example for other Export Credit Agencies. The ECGD should also
use the data to review the carbon footprint of its portfolio as
a whole and to identify areas where further emissions reductions
could be achieved without limiting the scope of its business.
(Paragraph 28)
11. It is difficult
to assess exactly how aircraft will be used. However, by excluding
aerospace from the Case Impact Assessment Process too many important
sustainable development impacts are left unconsidered. We reiterate
the conclusion of our predecessor Committee that the ECGD should
bring all aerospace-related applications within the Case Impact
Assessment Process, in addition to ICAO assessment. Full assessment
may be difficult, and may even be impossible on occasion, but
it is crucial to assess civil aerospace under these criteria to
demonstrate that these issues have at least been considered. In
such cases the assessment process should be accompanied by a narrative
explaining any difficulties in applying the process, and setting
out how conclusions have been reached. (Paragraph 31)
12. We do not believe
that the ECGD has struck the appropriate balance between protecting
commercial confidentiality and ensuring due transparency. The
ECGD provides support from public funds and exporters must therefore
recognise that this facility should necessarily entail certain
conditions to ensure adequate disclosure and scrutiny of funding
decisions. In 2003, our predecessor Committee recommended that
'requests for confidentiality should be tested against rigorous
criteria to ensure that only such information as might genuinely
compromise clients' commercial activities is withheld. A high
degree of disclosure should become a condition of ECGD support.'
We reiterate this recommendation. (Paragraph 35)
13. The ECGD needs
to ensure that project information is disclosed at a stage in
the assessment process where any challenge to the case could still
be taken into account. The ECGD should make the disclosure of
basic project information (name, involved parties, and a brief
description) a pre-condition of its appraisal process, for all
categories of project. As further assessments of the project's
economic, social and environmental impacts are made, these too
should be made publicly available. (Paragraph 36)
14. By failing to
disclose a wider range of information as a matter of course, the
ECGD has directly contributed to the negative perception of its
sustainable development policies. (Paragraph 38)
15. Where decisions
are taken that appear contrary to the information available in
the public domain (for example in the classification of projects
into impact categories) the ECGD should publish an explanation
of their decision and provide further supporting material as necessary.
This will increase confidence in the ECGD's procedures and make
it easier for Parliament and interested parties properly to assess
the ECGD's decisions. (Paragraph 39)
16. Where the ECGD
conditionally agrees to support a project that does not meet all
of its standards, it should publish a document clearly setting
out where the project falls short; why the ECGD remains prepared
to support the project, and what actions the ECGD will take to
ensure that the project is brought up to standard. The ECGD must
then demonstrate that these standards have been achieved. (Paragraph
40)
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